Tuesday, October 28, 2008

A prominent fear gauge, the CBOE volatility index (VIX) reached 89.53 last week and demonstrates how a high level of uncertainty has infused capital markets. Put buyers are committed to pay outsized premiums to protet their investments. Other volatility indicators are also elevated. VIX's predecessor, CBOE's VXO, which tracks projected volatility for the S&P 100 index .OEX options, surged 15.75 percent to 79.36. But it was well below the 150.19 reading set during the 1987 crash.